Natural gas selloff amid ongoing downtrend and weak demand

Natural gas (NG) prices continue to moderately decline. Seasonal heating demand is now facing troubles due to milder weather forecasts across the United States through the end of 2025. Record liquefied natural gas (LNG) exports, increased production volumes, and significant stockpile levels— which are higher than five-year averages—make the overall picture even more mixed.

A recent short-term rally in the commodity market appears to be a technical correction within a broader downtrend, crushing trader hopes for an upward reversal. A typical decline in liquidity prior to Christmas holidays further distorts price dynamics.

Technicals confirm a change of power in the market, with waning buying momentum and seller dominance. The price is stuck below the 20-day moving average, acting as dynamic resistance. Meanwhile, widening Bollinger Bands suggest a potential surge in volatility ahead of a strong move. The Chaikin Oscillator resumed its decline following a brief uptick that ended on December 23, a clear sign of capital outflows. The Relative Strength Index (RSI), despite a rebound from the lower limit, remains at 37—under the neutral 50 threshold. This highlights the market’s bearish sentiment without reaching extreme oversold territory. All in all, the current technical setup points to a further decline.

Fundamental factors also favor bears. Warmer weather in the US, record natural gas inventories in China, and Australia’s decision to partially reserve its new fuel production facilities for domestic demand also have a great impact on NG prices.

Given both technical and fundamental factors, the most likely near-term scenario is a continued decline. However, Friday’s release of US total rig count data may add some volatility to the market.

Consider the following trading plan:

Sell NG at the current price, with Take profit at $3.680 and Stop loss at $4.425.

This forecast holds true between December 25, 2025, and January 1, 2026.